Witness Testimony

Mr. Robert W. Holleyman II
President and Chief Executive Officer
Business Software Alliance
1150 18th Street, NW
Suite 700
Washington, DC, 20036

H.R. 107, The Digital Media Consumers' Rights Act of 2003
Subcommittee on Commerce, Trade, and Consumer Protection
May 12, 2004
10:00 AM

Good morning.  My name is Robert Holleyman.  I am the President and CEO of the Business Software Alliance¹.

The Business Software Alliance is an association of the world's leading software companies.  BSA's members create approximately 90% of the office productivity software in use in the U.S. and around the world.

I thank the subcommittee for the opportunity to testify here today.  The software industry has a strong interest in an effective and balanced approach to legal protections against the circumvention of encryption and other technologies that are used to protect copyrighted works.  We believe that a balanced and effective outcome was achieved six years ago when Congress, with the substantial input and leadership of the House Commerce Committee, enacted the Digital Millennium Copyright Act.  Our industry therefore opposes H.R. 107, which we believe would fundamentally alter the effective balance of interests embodied in the DMCA.  

Labeling Requirements  

Before discussing section 5 of the bill, I would like to make a few comments on the provisions of the bill concerning the labeling of certain audio CDs.  Although this provision is directed specifically to the music industry, it touches on the broader issue of mandatory labeling for the entire range of content.  

The software industry has been labeling its products for twenty years.  Our companies believe that informing the public about such matters as playability and system requirements is essential to keeping satisfied customers and a good business practice.  The industry labels its products because it is the right thing to do - not because government regulators have mandated it.  

We believe that this is an appropriate model for the content industries generally.  Vendors should inform the public about playability and related matters, and they should do it voluntarily.  Government mandates should be avoided as long as market forces are working.  As technological progress drives innovation on how systems operate, and how DRMs are used, labeling requirements must also change to reflect these developments.  We fear that mandated labeling may well delay prompt action by companies to keep consumers informed.  

Research Exception  

Section 5 (a) of the bill would exempt from the DMCA's antitrafficking provisions anything that that is done "solely in furtherance of scientific research into technological protection measures."  We view this exception as unnecessary and dangerously overbroad.  

BSA's member companies are the industry leaders in the business of secure computing.  They engage routinely in encryption research in the course of developing their products.  The advancement of the state of the art of encryption is the lifeblood of this segment of our industry.  

At the time Congress enacted the DMCA, BSA was a leading proponent of the encryption research exception that is embodied in section 1201(g) of the DMCA.  This exception was calibrated by Congress to ensure that encryption technology could advance unimpeded, while avoiding the trap of creating a safe harbor for bad actors.  It is the real world experience of our member companies that this provision has worked as intended:  the science of encryption continues to evolve rapidly.  This scientific progress continues to yield new and better technologies.  These technologies make an essential contribution to our national security and economic welfare, especially in the current heightened security environment.  

If section 1201 were to have an adverse effect on encryption research our industry would be among the first seeking changes to the encryption research exception.  We welcome Congress' continued monitoring of this provision.  We are aware of no evidence that section 1201 has stood in the way of the advancement of the state of the art in encryption or other protective technologies.  To the contrary, the proliferation of these technologies in the marketplace attests that the opposite is true.  No change is needed at this time.  

Even if change were necessary, the exception proposed in section 5(a) is overbroad.  The existing exception in section 1201(g) is narrow, focused, and clearly-defined as to the scope of permitted conduct and the parties who are eligible.  By contrast, section 5(a) of the bill proposes an exception in very broad terms.  It would create a substantial danger of shielding, not legitimate research, but the very activity that section 1201 was designed to prohibit.  

Exceptions for Noninfringing Use  

Section 5(b) of the bill would create two new exceptions to section 1201.  First, it would exempt any act of circumvention unless it results in a copyright infringement.  Second, it would exempt the manufacture and distribution of circumvention tools that are capable of enabling "significant noninfringing use of a copyrighted work."  Together, these exceptions would swallow the rule; they would effectively nullify section 1201.  Congress rejected this proposal in 1998, and this subcommittee should reject it now.  

When this subcommittee considered the DMCA in 1998, it heard a great deal of concern about the potential adverse effects that the anticircumvention provision might have on noninfringing uses of copyrighted works.  Through the leadership of this Committee, Congress responded to this concern by creating a failsafe mechanism which directs NTIA and the Copyright Office to conduct a rulemaking every three years to determine whether there is, or is likely to be any adverse impact on the ability of people to engage in noninfringing uses of copyrighted works.  After examining the evidence, these agencies report their findings and recommendations to the Librarian of Congress, who is empowered to create exceptions to permit those specific noninfringing uses.  

This process has now taken place twice - in 2000 and just six months ago in October 2003.  Each time, an entire year was consumed in evidence-gathering and deliberation.  Hearings were held in Washington and in other cities across the country.  Multiple rounds of written comments were accepted and considered.  At the end of the process exceptions were adopted to address specific instances where the evidence supported a conclusion that section 1201 was, or was likely to impede noninfringing use of copyrighted works.  

I would like to offer four observations about this rulemaking process:  

First, the process has functioned exactly as Congress intended it to function.  Where there have been claims that section 1201 is adversely affecting noninfringing use, and those claims are supported by evidence, the rulemaking has resulted in the creation of new exceptions.  In the most recent rulemaking NTIA and the Copyright Office recommended four specific exceptions, and those exceptions were adopted by the Librarian.  

Second, the rulemaking process crafted by this Committee is a far better mechanism for addressing the question of noninfringing use than the categorical exemption proposed in H.R. 107.  It can rectify specific instances where the protections of section 1201 are having an undesired effect, in a precise, focused way.  It does so without the same degree of risk as a broad, one-size-fits-all exemption.  

Third, the existence and proper functioning of the rulemaking process renders a broad noninfringing use exception unnecessary.  With a working safety valve in place, there is no need to open the floodgates.  

Fourth, and finally, variations of the broad noninfringing use exception proposed in H.R. 107 were proffered in both rulemakings.  In 2000, and again six months ago, these proposals were rejected for lack of evidence.  Nowhere in the voluminous record of the year-long proceeding was there sufficient factual support to recommend a general noninfringing use exception.  

Not only is section 5(b) of the bill unnecessary, but we believe it would be extremely harmful.  

Removing the technological protections from a work in digital form, even if it's done for a noninfringing purpose, leaves the work vulnerable to infringing use.  

This problem is magnified many times if the means to remove technological protections are permitted into the stream of commerce.  H.R. 107 would allow any device than can circumvent a technological measure for a noninfringing use.  But circumvention devices cannot distinguish between infringing and noninfringing use.  That is the conclusion reached by Professor Edward Felten, a computer scientist at Princeton and a vocal opponent of the DMCA, when questioned at conference at Berkeley last year.  

Consequently, any device that can circumvent a technological measure for a noninfringing use can also be used to circumvent in order to infringe.   By the same token, any device that can circumvent to enable infringing use, can also enable noninfringing use.  In effect, then, no circumvention device would remain subject to section 1201's prohibitions.  

In the long term, this would create a huge disincentive for our industry to develop the technological protection measures that content providers need in order to make their intellectual property available in digital form on the Internet.  Ultimately that would reduce the quantity and variety of materials available in that form.  

In the short term, broad availability of circumvention tools will lead to copyright piracy.  Each of the copyright industries suffers from this problem today.  Each is looking to a variety of technologies to make infringing use more difficult, and legitimate use easier.   

The software industry lost nearly $2 billion to piracy in the U.S. and more than $13 billion worldwide in 2002.  Most of these losses were due to unauthorized copying of software in a business setting.  One of the key elements of our companies' efforts to prevent these losses is the use of product activation and other access-control technologies to ensure that each working copy of their software in the workplace is licensed and paid for.  These simple self-help efforts would be stymied by the broad availability of circumvention tools that H.R. 107 would make legal.  H.R. 107 would increase our reliance upon litigation and governmental resources to reduce piracy.

 Congress' goal in 1998 was to encourage the development of activation and other technologies to make it possible for the promise of the Internet as a distribution channel to become a reality.  We share that goal.  In the six years since the DMCA was enacted, more copyrighted works have become available to more consumers in a greater variety of ways than ever before.  This progress should be allowed to continue.  

Thank you, Mr. Chairman, for inviting me to testify today.  I'd be happy to answer any questions the Members of the subcommittee may have.  

Related Documents